Intellectual property

De-branding and rebranding: the implications for the circular economy

Published on 6th Mar 2019

The current drive against single-use plastics is just one part of the EU's Circular Economy package, which is aimed at "closing the loop" of product lifecycles. The re-manufacturing and refurbishing industries have an important part to play in the circular economy, but may find themselves caught by a CJEU decision on re-branding of goods. The decision significantly strengthened the rights of trade mark owners, in circumstances where goods were being simply de-branded and re-branded without (other) modification, but the implications of the decision may be far wider.

What was the dispute about?

The defendants, Duma and GSI, acquired Mitsubishi forklift trucks outside the EEA and placed them under the customs warehousing procedure. They made changes to the goods to meet the standards of the European Union by replacing the identification plates and serial numbers with their own signs. They also removed all signs identical to the Mitsubishi brand. Then Duma and GSI imported the forklift trucks into the EEA and sold them within and outside of the EEA.

In 2008, Mitsubishi and MCFE took a legal action before the Brussels Commercial Court. They applied for an injunction against parallel trade and for the removal and reaffixing of the marks.

After a dismissal of the claim in first instance, the Brussels Court of Appeal (Hof van beroep Brussel) referred two questions to the European Court of Justice for a preliminary ruling. The first question concerned the de-branding and re-branding of goods, which are not yet introduced to the EEA. The second question asked whether it was relevant that the goods were still identifiable by the average consumer as originating from the trade mark proprietor.

What did the court decide?

The CJEU ruled that the proprietor of a trade mark may oppose a third party which, without his consent, is removing all signs identical with that trade mark and affixing other signs to goods placed under the customs warehousing procedure with a view to their import into or their placing on the market in the European Economic Area, where they have never been marketed before.

Otherwise, the trade mark proprietor would not be able to control the first placing on the market of the product bearing the trade mark. Since consumers will know the goods before associating them with the trade mark, the proprietor would not be able to realise the full economic value. The de-branding and re-branding also infringes the objective of ensuring undistorted competition. Even if the consumer still recognises the forklift trucks as Mitsubishi fork lift trucks, the essential function of the trademark may be harmed.

In reaching this decision, the CJEU did not follow the opinion of the Advocate General. The Advocate General had stated that the complete removal of a trademark did not constitute use of the trademark. The goods were initially held in bonded warehouses and had not yet been placed on the market in the European Economic Area. Thus, there was no use of the trademark in the course of trade. However, the CJEU clarified that the removal of the mark and the affixing of new signs on the goods impaired the functions of the trademark. Therefore, there was a commercial use of the trademark with regard to the import and marketing of the trademark in the EEA, although it was located in a customs warehouse.

The decision may further influence national case law and boost discussions around debranding constellations in general.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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